On the look-out for a white knight: options-based calculation of probability and expected value of increased bids in hostile takeover battles

Stefan Eichler and Dominik Maltritz

Applied Economics Letters, 2010, vol. 17, issue 11, 1033-1036

Abstract: Takeover bids provide an option right to the target's shareholders; they guarantee the offered price but maintain the chance of higher offers. Using Option Pricing Theory (OPT) we estimate the probability and expected value of higher bids from target stock prices.

Date: 2010
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DOI: 10.1080/00036840902817466

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